Markets expectations around Wednesday’s quarterly earnings report by the most valuable publicly traded company in the world had risen to a fever pitch. Anxiety over billions in investment in artificial intelligence pervaded, in part because the US has been starved of reliable economic data by the recent government shutdown.
Investors hoped that both questions would be in part answered by Nvidia’s earnings and by a jobs report due on Thursday morning.
“This is a ‘So goes Nvidia, so goes the market’ kind of report,” Scott Martin, chief investment officer at Kingsview Wealth Management, told Bloomberg in a concise summary of market sentiment.
The prospect of a market mood swing had built in advance of the earnings call, with options markets anticipating Nvidia’s shares could move 6%, or $280bn in value, up or down. Julian Emanuel, Evercore ISI’s chief equities strategist, told the Financial Times that “angst around ‘peak AI’ has been palpable”.
The anxiety has only been heightened by signs that some AI players, including Palantir’s Peter Thiel, Japanese investor Masayoshi of SoftBank have recently sold off multi-billion positions in Nvidia if only (in the case of Softbank) to place those funds in OpenAI. Michael Burry, who became a legend on Wall Street for taking a short position ahead of the 2008 financial crisis, announced that he was shorting Nvidia and Palantir stock – and warned of an AI bubble – before abruptly winding down his investment company, Scion Asset Management.
Analysts had expected the chip behemoth to show more than 50% growth in both net income and revenue in its fiscal third quarter as the tech giants – Microsoft, Amazon, Alphabet and Meta – that represent more than 40% of Nvidia’s sales continue to pour billions into the chipmaker.
The company reported growth beyond even those lofty expectations. Nvidia reported $57.01bn in total revenues, beating investor expectations of $54.9bn in revenue. Sales increased 62% year-over-year, and profit rose 65% year-on-year to $31.9bn. On the key metric of data-center sales, the company reported $51.2bn in revenue, beating expectations of $49bn.
Nvidia’s future looks bright, too. The company is projecting fourth-quarter revenue of around $65bn; analysts had predicted the company would issue a guidance of $61bn.
CEO Jensen Huang addressed the elephant in the room on Wednesday’s earnings call after Nvidia’s stellar numbers were released.
“There’s been a lot of talk about an AI bubble,” he said. “From our vantage point, we see something very different. As a reminder, Nvidia is unlike any other accelerator. We excel at every phase of AI from pre-training to post-training to inference.”
Market analysts had been on the lookout for signs that the big AI spenders could be forced to pull back their spending on Nvidia’s wares or show any lack of absolute dedication to the AI investment behemoth that in one form or another represents with some estimates attributing as much as 75% of the S&P 500’s gains in 2025. Investors have grown wary of the AI boom, with shares in Nvidia and Palantir, a major AI player, falling more than 10% since peaking last month.
The Nasdaq stock exchange has seen a broad, panicked selloff over the past few days in response to these fears. Still, Nvidia shares are up about 37% for the year to date, and they rose in after-hours trading on Wednesday.
The Nvidia earnings report, and investor reaction over the coming hours or days, will be read into for broader economic signals because AI is now intimately tied, correctly or falsely, to broader economic confidence, with Nvidia as the foundation for the entire artificial intelligence buildout.
“Market psychology has been negative this month as investors worried that the artificial intelligence infrastructure buildout was a bubble and in a few years we may look back at this time and point to signs that it was,” said Chris Zaccarelli, chief investment officer for Northlight Asset Management after the earnings report was released.
For bullish analysts, fears that the AI revolution would soon follow the path of internet stocks in 1999 have been entirely overblown, and the AI party is only just getting started.
“The largest technology companies in the world are extremely profitable and they are reinvesting billions of dollars into data centers, servers and chips, and the spending is real,” Zaccarelli added.
